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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON LARASCO, INC., a corporation, Washington )

w Respondent, )

V. i DEL NORTE, LLC, a Washington ) limited liability company, ) Defendant, ) and SR DEVELOPMENT, LLC, a ) Washington limited liability company; ) and ELLIOTT J. SEVERSON, ) 

## Appellants, j
and MARK ROBERTS; ROBERTS; and EDWARD )
Defendants. ) No. 71158-0-1 (consolidated w/71450-3-1) DIVISION ONE

UNPUBLISHED OPINION FILED: May 11, 2015

Becker, J. — This appeal is from ajudgment and award of attorney fees entered after a bench trial. The dispute involved a million dollar loan made byNo. 71158-0-1/2 

### Larasco Inc. to appellant SR Development LLC.1 We affirm the judgment, but
reverse the award ofattorney fees insofar as itbound appellant ElliottSeverson
as a guarantor. Severson, Mark Roberts, and Edward Roberts owned SR Development at 

### the time Larasco loaned the money. The Roberts and Severson signed a 

### promissory note in their capacities as members of SR Development. Under the terms ofthe note, SR Developmentwas obligated to make monthly payments of $12,000.00 to Larasco for one year beginning on May 1, 2008. A final payment 

### of$961,875.64 was to be paid on May 1, 2009. IfSR Development defaulted, Larasco was entitled to receive 12 percent interest on the note. 

### Severson and the Roberts also signed an "Addendum to Promissory Note 

### (Additional Security)" in theirindividual capacities. This documentwill be referred to as the "SecurityAddendum." Init, the Roberts and Severson agreed to secure the note withtheir interests in a piece ofproperty known as the Lakemont 

### Building. The Lakemont Building was a commercial real estate project the 

### Roberts and Seversonjointly owned and controlled through I-90 Lakemont LLC. The Roberts and Severson agreed that inthe event of a default on the 

### promissory note, "Holder" (i.e. Larasco) in its sole discretionwould have the right

1The trialcourt's findings of fact and conclusions of lawexplaining the 

### basis for itsjudgmentrefer tothree promissory notes. Each note resulted in 

### litigation. Thefirst note relates to Larasco's million dollar loan to SR Development. The second note is related to a $705,476 loan made by Larasco to Del Norte LLC. The third note was created after SR Development made an 

### advanced paymenton the million dollar loan. This appeal addresses issues related to the first and third notes. The Del Norte loan is not at issue in this appeal.No. 71158-0-1/3


### to require them to "execute and properly record a Deed ofTrust" to the Lakemont Building. The third document in connection with the loan was the "Addendum to 

### Promissory Note (Unconditional Guarantee)" signed bythe Roberts and Severson in their individual capacities. Larasco drafted the documents to close the deal. All ofthe documents
were simultaneously executed. 

### InSeptember2008, SR Developmentmade a $500,000.00 advance 

### paymentto Larasco on the loan. SR Development issued a second promissory note to Larasco for $481,358.55. The trial courtfound this was to reflectthe 

### amount of principal remaining afterthe $500,000.00 payment. The second note included mostofthe terms ofthe original loan, exceptthatthe parties agreed to extend the final payment date until September2013. Soon, SR Development asked Larasco to modify the terms ofthe loan


### once more because itwas experiencing financial difficulties. In May 2009, 

### Larasco agreed to lower the interest rate to fivepercent and lowerthe monthly 

### payments. The parties executed an addendum reflecting that modification. The loan went into default in March 2012. No further payments were made. 

### InAugust 2012, Larasco notifiedSeverson and the Roberts that Larasco


### was exercising its rightunderthe Security Addendum to require them to execute and record a deed oftrust on the Lakemont Building. When this did not happen, 

### Larasco recorded a lis pendens and initiated litigation.No. 71158-0-1/4


### Larasco's first amended complaint requested ajudgment against SR Developmentfor all amounts due underthe notes related to the loan, as amended; a judgmentagainst Severson and the Roberts for all amounts due underthe guarantee; declaratory reliefconfirming that Larasco held a valid 

### security interest inthe Lakemont Building; and attorneyfees. Larasco also requested an order ofspecific performance requiring the defendants to execute and record a deed oftrust on the Lakemont Building. 

### Before trial, the Roberts stipulated to a settlementwith Larasco. On July 19, 2013, the trial courtentered an order reflecting the terms ofthe Roberts

### Larasco stipulation. Underthat order, Larasco became entitled to ajudgment againstthe Roberts, as well as a capped amount ofattorneyfees. In October 2013, Larasco wentto trial against Severson. The trial court 

### entered ajudgmenton the note for $559,056.21, jointlyand severally against defendants SR Development, the Roberts, and Severson. This amount included accrued interest. The trial court also made an award against SR Development, 

### Severson, and the Roberts, jointly and severally, for the $177,050.93 in attorney fees and costs that Larasco incurred between May 4, 2012, and July 19, 2013. The remaining $124,492.09 in attorney fees and costs that Larasco incurred between July 20, 2013, and the entry ofjudgment on November4, 2013, were to be paid by Severson. Severson appeals.No. 71158-0-1/5
SPECIFIC PERFORMANCE OF THE SECURITY ADDENDUM WAS PROPERLY ORDERED 

### The trial court ordered Severson to convey and record a deed oftrust on 

### the Lakemont Building in favor ofLarasco underthe terms ofthe Security Addendum. Severson contends specific performance was improperbecause the Security Addendum did not specify the material terms to be included inthe deed oftrust. 

### Specific performance should be granted only ifan agreementcan be enforced withoutjudicially-supplied material terms. Setterlund v. Firestone. 104 Wn.2d 24, 25-26, 700 P.2d 745 (1985); Hubbell v. Ward. 40 Wn.2d 779, 781-82, 246 P.2d 468 (1952). Severson contends the material terms for a deed oftrust 

### include provisions forforfeiture, default, risk ofloss, liens by third parties, insurance, taxes, acceleration, and due-on-sale clauses, none of which are mentioned inthe SecurityAddendum. 

### The provisions identified by Severson may indicate the existence of a "finalagreement." Ecolite Mfg. Co. v. R.A. Hanson Co.. 43 Wn. App. 267, 272, 716 P.2d 937 (1986). But Severson cites no authority indicating that all such provisions must be presentto justify an order of specific performance of an agreementto provide a deed oftrust. Together, the promissory note and the SecurityAddendum provide all material terms required to enforce the parties' agreement. The SecurityAddendum identifies the Lakemont Building as the property upon which a deed oftrustwas to be executed and recorded in case of default. The promissory note establishes when a default occurs. These termsNo. 71158-0-1/6



### were sufficientto support an order requiring execution and recordation of a deed oftrustto the Lakemont Building upon default. 

### Severson further contends thatthe SecurityAddendum is unenforceable underthe real estate statute offrauds because its description ofthe Lakemont Building is inadequate. The property is described inthe SecurityAddendum as follows: The real estate commonly known as: The Lakemont Building, which is located at 5150 Village Park Dr. S.E., and more fully described as: an unexecuted and unrecorded Deed ofTrust on the I-90 Lakemont Building located at 5150 Village Park Dr. S.E., Bellevue, WA 98006. Washington has a special statute offrauds for real property that requires every real estate conveyance orencumbrance to be executed by deed. RCW 64.04.010. To comply with the real estate statute offrauds, every deed conveying an interest in platted real property must correctly describe the real estate by lot number, block number, addition, city, county, and state to be enforceable. RCW 64.04.010; Key Design Inc. v. Moser, 138 Wn.2d 875, 881, 983 P.2d 653, 993 P.2d 900 (1999). The description quoted above does not include all ofthese items. The real estate statute offrauds does not encompass all contracts that 

### referto real property. Firth v. Lu, 146Wn.2d 608, 614-15, 49 P.3d 117 (2002). It applies only to: "(1) actual conveyances of title or interests inreal property; and 

### (2) agreements that create or evidence an encumbrance of real property." Firth, 146Wn.2d at 614. Ifan agreementdoes not fall within those two categories, itNo. 71158-0-1/7 

### may be enforced so long as the property that isthe subjectofthat agreement can be readily identified. See Firth. 146Wn.2d at 614-15. 

### Severson does notdemonstrate thatthe unrecorded SecurityAddendum is a conveyance, orthat itcreates orevidences an encumbrance. Itreflects a 

### promise by the signatories to create a deed oftrust ifand when SR Development defaulted on the loan. According to the terms ofthe SecurityAddendum, the 

### holderofthe promissory note may require "the undersigned" to "execute and properly record a Deed of Trust" on the Lakemont Building ifpayment underthe note is not timely received. Thus, the SecurityAddendum is not itselfa deed of trust. If itwere a deed oftrust, there would have been no need for the borrowers to promise to execute and record a deed oftrust in the future in the event of a 

### default. We conclude the real estate statute offrauds does not apply because the SecurityAddendum did not convey or encumberthe Lakemont Building. Continuing withthe mistaken premise thatthe SecurityAddendum was a conveyance or encumbrance, Severson contends that specific performance was 

### improper because the SecurityAddendum was not signed by anyone who had the ability to convey or encumberthe Lakemont Building. The Lakemont Building
was owned by 1-90 Lakemont. The SecurityAddendum was signed by the Roberts and Severson individually, with no indication that they were acting on behalf of I-90 Lakemont. The lack of signature by anyone acting on behalfof I-90 Lakemont does not renderthe Security Addendum unenforceable. Severson and the Roberts
were the controlling owners of I-90 Lakemont. They were the individuals whoNo. 71158-0-1/8
would have the authority to execute and record a deed oftrustto the Lakemont Building inthe event of a default on the promissory note. Severson provides no basis for holding that his promise to do so inthe SecurityAddendum is unenforceable. Finally, Severson contends itwas inequitable to enforce the Security Addendum against him because of his detrimental reliance on certain statements by Larasco. To prevail under a theory ofequitable estoppel, Severson must establish a statement upon which he detrimentally relied and that his reliance
was reasonable. Laymon v. Dep't of Natural Res., 99 Wn. App. 518, 525, 994 P.2d 232 (2000). Severson claims to have believed that SR Development satisfied its 

### obligations underthe first promissory note by paying Larasco $500,000 ahead of schedule. He says he understood that Larasco needed cash, and the 

### consideration to SR Developmentfor the advance payment of$500,000 was discharge ofthe original note. Severson alleges that Larasco confirmed this understanding in unrelated bankruptcy litigation. The trial courtfound the evidence Severson presented to supportthis 

### argumentwas less credible than Larasco's evidence. The court concluded the parties never intended to discharge the obligations underthe first promissory note. The trial court's findings underlying this conclusion are supported by substantial evidence. Accordingly, the trial court's conclusion willnot be disturbed.

8No. 71158-0-1/9
Because we reject Severson's argumentthatthe SecurityAddendum was void and of no effect, we necessarily reject his argumentthat Larasco lacked substantialjustification for recording a lis pendens againstthe Lakemont Building. In summary, the SecurityAddendum specifies the material terms necessary to supportthe award ofspecific performance, its description ofthe 

### Lakemont Building did not need to complywith the real estate statute offrauds, it
was signed by individuals who had the capacityto carry outthe promise they 

### undertook, and its enforcement against Severson is not inequitable. The trial court did not err inordering specific performance ofthe promise to execute and record a deed oftrustto the Lakemont Building. THE UNCONDITIONAL GUARANTEE DID NOT INCLUDE LIABILITY FOR ATTORNEY FEES Severson claims the trial courterred by requiring him to pay Larasco's attorney fees as a guarantor. 

### InWashington, a litigant is generally not entitled to attorneyfees unless authorized by contract, statute, or a recognized ground in equity. Barnettv. Buchan Baking Co.. 108 Wn.2d 405, 408, 738 P.2d 1056 (1987). 

### The promissory note provides for an award ofattorney fees for loan

### related litigation, but the only entity obligated by the note's provision is SR Development: In case suit or action is commenced to collect this note or any 

### portion thereofI/We, SR DEVELOPMENT, LLC promises to pay, in addition to the costs provided by statute, such sum as the court 

### may adjudge reasonable as attorney's fees therein (including anyNo. 71158-0-1/10
action to enforce the judgment and this provision as to attorney's fees and costs shall survive thejudgment.). Larasco contends that Severson became personally liable for the award of 

### attorneyfees against SR Development by signing the Unconditional Guarantee. There is no specific reference to attorney fees inthe Unconditional Guarantee. However, the guarantee refers to the terms ofthe promissory note. The operative terms ofthe guarantee are found in its first paragraph: For value received, at the request of the undersigned and in reliance on this guaranty, the undersigned as a direct and primary obligation, hereby, jointly and severally, unconditionally guarantee(s) the prompt payment of principal and interest on Promissory Note No. 08-0002, executed on even date herewith, when and as due in accordance with its terms, and hereby waive(s) 

### diligence, presentment, demand, protest, or notice of any kind whatsoever, as well as any requirement that the holder exhaust any 

### right or take any action against the maker of the foregoing promissory note and hereby consent(s) to any extension of time or renewal thereof. Severson responds that the words used inthe guarantee— 

### "unconditionally guarantee(s) the prompt payment of principal and interest"— make him liable only forthe principal and interest accrued on the note. 

### "Sureties and guarantors are not held liable beyond the express terms of their agreement." Kennev v. Read. 100 Wn. App. 467, 474, 997 P.2d 455, amended on denial ofrecons., 4 P.3d 862 (2000). When a guarantee is part of a 

### transaction involving multiple documents, all ofthe instruments must be read 

### togethereven ifthey are notexecuted bythe same parties. Kennev, 100Wn. App. at 474. Ifa guarantee can be reasonably interpreted to have more than one 

### meaning, it should be construed againstthe drafter. Seattle-First Nat'l Bank v. Hawk, 17 Wn. App. 251, 256, 562 P.2d 260 (1977).
10No. 71158-0-1/11 

### The Roberts, who were the otherguarantors, interpret the guarantee language to include allamounts due underthe note, includingattorney fees. Larasco contends the Roberts' interpretation is significantextrinsic evidence of intent. Underthe "context rule," extrinsic evidence can be used to discern 

### contractual intent, but only so long as itdoes not subtractfrom, vary, or contradictthe written words of a contract. Berg v. Hudesman. 115 Wn.2d 657, 

### 667-78, 801 P.2d 222 (1990). Here, the written words ofthe guarantee ensure payment of principal and interest on the note. They do not guarantee anything else. We cannot add language to the guarantee to make itconform to the extrinsic evidence. "Extrinsic evidence is to be used to illuminate what was written, not what was intended to be written." Hollis v. Garwall, Inc.. 137 Wn.2d 683, 697, 974 P.2d 836 (1999): see also MacLean Townhomes. L.L.C. v. Am. 1st Roofing &Builders Inc. 133 Wn. App. 828, 831, 138 P.3d 155 (2006). Ifthe 

### intentwas to have Severson and the Roberts guarantee attorneyfees that might be awarded to Larasco againstthe maker ofthe note, the guarantee should have used a broader phrase, such as "allobligations underthe note," ratherthan merely guaranteeing principal and interest. Larasco suggests it is only fair that Severson should have to pay attorney fees because Severson's answer asserted a contractual right to recover attorney fees ifhe prevailed. But Severson was responding on behalfof SR Development
as well as himself. SR Developmentwas relying on the attorney fee provision in the note, not necessarily on the language ofthe guarantee.

11No. 71158-0-1/12


### In a case cited by Larasco, our Supreme Court held a guarantor liable for the attorney fees incurred to collect money under a contract even though the guarantor did not expressly agree to guarantee those costs. N. Pac. Fin. Corp. v. Howell-Thompson Motor Co., 162 Wash. 387, 298 P. 424 (1931). The contract inthat case contained an express promise by the vendee to pay attorney fees. The vendor assigned the contract. Inthe assignment, the vendorguaranteed the paymentof all moneys "due or to become due under said contract" as well as "all costs incurred by holder." N. Pac. Fin. Corp., 162 Wash, at 388. Inview ofthe broad phrasing ofthe guarantee, the court determined that even though the guarantee did not specifically mention attorney fees, "all ofthe provisions ofthe contract are guaranteed by the defendant," including the promise to pay attorney fees. N. Pac. Fin. Corp., 162 Wash, at 393. 

### Severson's guarantee is not as broad. Severson's guarantee ofpayment of principal and interest on the note "when and as due in accordance with its terms" does not encompass the attorney fee provision in the note. The attorney fee provision inthe note was binding only on SR Development. Larasco argues that the award ofattorney fees against Severson can be 

### upheld as a matter ofequity. Attorney fees may be awarded to a prevailing party when a case is resolved under principles ofequity or iflitigation has been pursued in bad faith. Wright v. Dave Johnson Ins., Inc., 167 Wn. App. 758, 784, 275P.3d 339. review denied, 175Wn.2d 1008 (2012): Rooerson Hiller Corp. v. Port of PortAngeles, 96 Wn. App. 918, 926-27, 982 P.2d 131 (1999), review denied, 140Wn.2d 1010 (2000). Thejudgment here sounds in contract, not

12No. 71158-0-1/13 

### equity, and the trialcourt did not findthat Severson pursued this matter in bad faith. 

### The liability of a guarantor "cannotbe enlarged beyond the strict intent of his contract." Hansen Serv. v. Lunn. 155 Wash. 182, 191, 283 P. 695 (1930). We conclude the court erred in holding Severson personally liable forLarasco's attorney fees. MOTION TO STRIKE 

### Although the Roberts were once Severson's codefendants, they settled with Larasco beforetrial and entered into a stipulation that capped their liability for attorneyfees as ofthe date ofthe stipulation. Having settled, they did not file
a notice ofappeal. Nevertheless, on August4, 2014, the Roberts filed a brief as 

### respondents opposing Severson's appeal. The Roberts claim thatthey are entitled to address this court "inorderto avoid any prejudice to them that might result from this appeal ifthe trial court's decision were not affirmed." Severson moved to strike the Roberts' brief on the ground thatthe Roberts have no standing to oppose his appeal: The Roberts brothers stipulated that they would be liable for a sum certain regardless of the outcome of this litigation. They did so under no duress and while represented by counsel. Now, the Roberts brothers want to file a responsive brief despite having intentionally removed themselves from the case by stipulating to judgment. In reality, the Roberts' brief is an amicus brief filed without permission of the Court in violation of RAP 10.6. The Roberts have no basis to file a briefto protect their "rights," and are not a respondent to this appeal. The Roberts' brief should be stricken.

13No. 71158-0-1/14



### The Roberts oppose the motion to strike. Ifthe motion is granted, the Roberts request that this court clarify "that any reliefSeverson may obtain will be conditioned on a lack of adverse effect on them." The cases the Roberts cite as authority do not even remotely suggestthat a defendantwho has settled priorto trial has the right to file a briefin a codefendant's appeal. Ifthere are multiple parties on a side of a case and fewer than all ofthe parties on that side timely file a notice ofappeal, this courtwillgrant reliefonly (1) to a party who has timely filed a notice, (2) to a party who has beenjoined, or (3) to a party ifdemanded by the necessities ofthe case. RAP 5.3(i). This courtwill permitthejoinderof a party who did not give notice only ifthe party's rights or duties are derived through the rights or duties of a party who timely filed a notice 

### ofappeal. RAP 5.3(i); see, e.g., Genie Indus., Inc. v. MarketTrans., Ltd.. 138 Wn. App. 694, 707-16, 158 P.3d 1217 (2007). The Roberts do not invoke RAP 5.3 nor do they explain why this court should determine thatthey are necessary parties to this appeal. 

### The motion to strike is granted. Thejudgmenton the note is affirmed. The award ofattorney fees against Severson individually is reversed. 

# OeJfeg,
WE CONCUR: 

# fax, J14